Accountability

The MetroHealth System Bonds Garner $4.3 Billion in Orders

In a historic transaction this week, The MetroHealth System priced $945.7 million in hospital revenue bonds to fund its campus transformation, which includes the construction of a new 12-story, 270 bed hospital, a new central utility plant, new parking garage and several other essential projects.

MetroHealth will serve as issuer of Series 2017 fixed-rate hospital revenue tax-exempt bonds to fund all associated costs of the project. The bonds have a 40-year final maturity and average life of 28.4 years. The highly competitive issuance resulted in an All-In True Interest Cost for the bonds of 4.997 percent.

"We had 122 accounts (funds, banks, firms and individuals) put in orders for bonds," said Akram Boutros, MD, FACHE, president and CEO of MetroHealth. "Not only is this an important validation of the success we've earned with our strategy, recent growth and operating performance improvements, it's proof of the industry’s belief in MetroHealth and the path we’re taking.”

“During comprehensive investor presentations in Boston, Philadelphia, Princeton and New York, we noted wide interest in the transformation project and what it represents to the community. As the largest public construction project in Cuyahoga County, and one of the largest in the nation, the benefits to economic development of Cleveland and Cuyahoga County are substantial,” said Craig Richmond, senior vice president and chief financial officer of MetroHealth.

Bank of America Merrill Lynch and JP Morgan Securities are co-senior underwriters for the sale of the bonds. Kaufman, Hall & Associates has acted as MetroHealth’s financial advisers for the campus transformation since 2015.

Cuyahoga County is supporting the rebuilding of the hospital's main campus by obtaining a Letter of Credit to create a $64 million debt service reserve fund. Ultimately, the County's support will save MetroHealth millions of dollars on the total cost of the project.

Three weeks prior to the bond issue, Standard & Poor’s and Fitch assigned BBB- ratings to MetroHealth’s Series 2017 fixed-rate bonds, with Moody’s assigning a Baa3 rating. The rating agencies assigned stable outlooks, recognizing items including MetroHealth’s ongoing strong enterprise profile, which reflects its essentiality to the county, including its role as one of the region's largest Level 1 adult trauma centers and safety net providers.

MetroHealth self-financed $91 million for the first phase of the campus transformation, including the 2015 demolition of the North Coast Behavioral Health building and the 2016 vertical expansion of the Critical Care Pavilion, providing 85 critical care beds and Ohio’s only Special Disease Care Unit to treat patients with emerging contagious diseases including Ebola.

About the MetroHealth System

The MetroHealth System, Cuyahoga County’s public health system, is honoring its commitment to create a healthier community by building a new hospital on its main campus in Cleveland. The building, and the 25 acres of green space around it, are catalyzing the revitalization of MetroHealth’s West Side neighborhood.

MetroHealth will break ground on the new hospital in late 2018, using nearly $1 billion it borrowed on its own credit after dramatically improving its finances. In the past five years, MetroHealth’s operating revenue has increased by 44.5 percent and its number of employees by 21 percent. Today, its staff of 7,700 provides care at MetroHealth’s four hospitals, four emergency departments and more than 20 health centers and 40 additional sites throughout Cuyahoga County. In the past year, MetroHealth has served 300,000 patients at more than 1.4 million visits in its hospitals and health centers, 75 percent of whom are uninsured or covered by Medicare or Medicaid.

The health system is home to Cuyahoga County’s most experienced Level I Adult Trauma Center, verified since 1992, and the only adult and pediatric burn center in the state of Ohio.

As an academic medical center, MetroHealth is committed to teaching and research. Each active staff physician holds a faculty appointment at Case Western Reserve University School of Medicine and its main campus hospital houses a Cleveland Metropolitan School District high school of science and health.